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With rumors of a possible acquisition of Salesforce circulating – and with Microsoft a leading contender to make that buy – it’s interesting to wonder what such a purchase might entail, and what its impact on the procurement market would be.

“As old guard vendors like Microsoft try to re-architect their businesses for a cloud- and mobility-first approach,” he said, “acquiring the technology and customer base of a pioneer in those areas looks like a smart idea.”

Muscarella identified several useful points of interest to be scrutinized in any Microsoft/Salesforce merger.

- Pricing. The two companies employ vastly different pricing strategies. Either side would have a rough time assimilating the other’s approach.
- Quality of service. Microsoft makes vast bargeloads of money from support. How would it live alongside a completely different support model/infrastructure? Or would Salesforce be forced to adopt its parent’s support, and how would that go over?
- Innovation? Microsoft needs to innovate in this domain if it is to become a serious player in procurement – and given its lofty goals for Azure, that would be essential. Given Redmond’s penchant for recycling and mixing/matching, could it manage?
- Contractual practices. Microsoft’s approach to contracting and negotiation would need to soften. Could it manage? And if not, what would be the impact on Salesforce?

Microsoft/Salesforce is fascinating what-if; but if it comes to pass, Muscarella said, “One thing is certain – it will have an impact on the thousands of customers that use both vendor solutions.”

With Salesforce currently valued at $50 billion, the circle of potential buyers is very small, but also very interesting, Mitchell pointed out. Depending on who bites, in the end, Salesforce’s vast armies of users might find their world changing dramatically.

A number of the potential buyers are already in the procurement business, it turns out, and many – Microsoft, IBM, Google, Oracle, Amazon – are already gigantic platform providers. To which of them would Salesforce be a strategic plus?

Mitchell pointed out that Microsoft’s cloud presence is strong and growing rapidly, but that it isn’t yet a player in procurement. Acquiring Salesforce would change that. How would this affect current Salesforce users’ perceptions of security and ease of use? Azure has expanded a great deal, but is still an evolving creature.

IBM, Mitchell said, is strong in the market, but passe and in need of a face lift, which Salesforce could provide. Oracle could buy Salesforce without missing the money, but already owns Siebel.

Google might be the most interesting buyer, because it has steered clear of real business integration and would have to rally and innovate to make it work.

Whatever happens, Mitchell concluded, the potential impact on terms, pricing, service and security could be significant, and all players should have their responses gamed out in advance.

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http://feeds.feedblitz.com/~/103200822/0/b2b~Acquisition-of-Salesforce-Could-Have-a-Profound-Effect-on-the-Procurement-Market/feed/0http://www.b2b.com/2015/07/21/is-single-vendor-sourcing-still-the-way-to-go-assessing-vendor-risk/Is Single-Vendor Sourcing Still the Way to Go? Assessing Vendor Riskhttp://feeds.feedblitz.com/~/102504548/0/b2b~Is-SingleVendor-Sourcing-Still-the-Way-to-Go-Assessing-Vendor-Risk/
http://feeds.feedblitz.com/~/102504548/0/b2b~Is-SingleVendor-Sourcing-Still-the-Way-to-Go-Assessing-Vendor-Risk/#commentsTue, 21 Jul 2015 18:14:55 +0000http://www.b2b.com/?p=2818Single-Vendor Sourcing has been a strategic go-to for many years, offering companies stronger collaborative relationships, easier relationship management, stronger supplier response and greater cooperation in production/logistics synchronization and sharing of data. But Joshua Nelson, The Hackett Group’s Director in the Strategy and Operations Practice, recently suggested that single-vendor might not always be the best sourcing […]

Globalization, for instance, may increase the risk brought on by a single-source strategy, he pointed out: single-vendor sources are often foreign, and as such can introduce intellectual property risks, financial risk from foreign exchange fluctuations, and political instability – risks that are all mitigated by a multi-vendor sourcing approach.

Some companies, like Pricewaterhouse Cooper, eschew single-vendor sourcing altogether, implying that a one-size-fits-all strategy may not exist, and that there are scenarios where vendor sourcing is an open question.

Nelson suggested that a strong discriminator for choosing between single- and multi-vendor sourcing may be the degree of dependency between partners. He described “lopsided dependency,” in which the relationship is not a symmetrical one: both sides will tend not to respond consistently with behaviors that are mutually beneficial, because one partner is far more powerful than the other and has far less at stake in the relationship (Walmart is a classic example).

When the partnership is lopsided in favor of the supplier, the buying partner must live with it when capacity shifts result in reducing the buyer in priority. When the partnership is lopsided in favor of the buyer, demand shifts can leave the supplier unable to respond quickly enough, increasing financial pressure and threatening stability.

Both of these scenarios are mitigated by a multi-vendor sourcing strategy, Nelson concluded. Where a partnership is “lopsided,” multi-sourcing is safer all around.

When dependency is mutual, however, and both partners consider the relationship of high importance, the supplier is more responsive and flexible when demand changes, and both sides are motivated to keep costs low and quality high. In this scenario, single-vendor sourcing makes more sense.

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Manufacturing resource planning is increasingly essential to lean supply chain efficiency. But having MRP in place may be only a partial measure.

Process expert Jakob Bjorklund has suggested that, while having MRP in place is certainly a step toward operational efficiency in manufacturing, it can often take the enterprise only halfway as far as it might go.

“Even as companies try to focus on the disciplines normally associated with the idea of a lean supply chain,” Bjorklund said, “another fundamental paradigm shift that must take place within their organization, and it is often overlooked.”

That paradigm shift involves re-thinking the points at which manufacturing operations commit, keying ever more closely on demand. When demand is stable and highly predictable, “make-to-stock” (MTS) is a model that works well: resource planning is simple when demand is flat. Raw materials may be ordered in large, inexpensive quantities, because the timing of their use is easily established.

The problem, said Bjorklund, is that it seldom works out this cleanly in the real world. Even when some demand is flat, it is more typical that a significant portion of any manufacturer’s products will be ordered with fluctuating frequency, rendering a “make-to-order” (MTO) model more advisable.

His take-home point is that it makes sense to simply run both planning processes in parallel: identify flat-demand patterns and plan manufacturing resources for those products accordingly, but implement MTO planning for those products where customer demand requires more agile responsiveness.

“By continuously analyzing demand patterns and inventory turns, the point of postponement can be changed over time to achieve the optimal balance between efficiency and responsiveness,” he said.

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http://feeds.feedblitz.com/~/92629672/0/b2b~Lean-supply-chain-Pt-resource-planning-in-parallel/feed/0http://www.b2b.com/2015/05/18/lean-supply-chain-pt-3-accountability-in-demand-forecasting/Lean supply chain, Pt. 3: accountability in demand forecastinghttp://feeds.feedblitz.com/~/92401312/0/b2b~Lean-supply-chain-Pt-accountability-in-demand-forecasting/
http://feeds.feedblitz.com/~/92401312/0/b2b~Lean-supply-chain-Pt-accountability-in-demand-forecasting/#commentsMon, 18 May 2015 14:35:22 +0000http://www.b2b.com/?p=2634Demand forecasting is problematic for a number of reasons, but its importance in the lean supply chain is obvious. Getting control of the forecasting process may require a re-thinking of who is contributing to the process within the enterprise and how various contributors approach forecasting. Process and planning expert Jakob Bjorklund has suggested that one […]

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Demand forecasting is problematic for a number of reasons, but its importance in the lean supply chain is obvious. Getting control of the forecasting process may require a re-thinking of who is contributing to the process within the enterprise and how various contributors approach forecasting.

Process and planning expert Jakob Bjorklund has suggested that one issue that may compromise the accuracy of demand forecasting is accountability for the process.

“It is imperative,” he said, “that a manufacturing enterprise assign demand forecasting to an independent party within the company that has more of a holistic point of view than would sales, manufacturing or any other specific department.”

Increased demand forecasting accuracy means lower inventory levels and enhanced customer service, he said, and those are very desirable goals – but in pursuit of those goals, many companies disseminate responsibility for demand forecasting across all of the departments it affects. This is an innocent mistake, but it can introduce error in forecasting.

In Bjorklund’s example, demand forecasting in the hands of the sales department may lead to overly optimistic projections; manufacturing operations, on the other hand, may introduce overly cautious projections, erring on the side of conservatism.

Getting everyone’s input into the process is not a bad thing in itself, he said, but in the end, no single individual or department ends up being accountable for the accuracy of the demand forecasting process, and this is a problem: “It is not surprising that, as a result, this crucial role tends to fall between chairs in many enterprises,” he said.

Identifying a proper accountable authority within the company to master and monitor demand forecasting, he said, is a crucial component in improving forecasting accuracy.

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Every manufacturer strives to cultivate efficiently – yet responsiveness to customers is equally important. ERP expert Jakob Bjorklund has pointed out that these two imperatives can often be in conflict.

It is common, Bjorklund noted, for manufacturers to produce in very large quantities, which, despite creating the challenge of storing surplus product, can generate efficiencies in raw materials purchases, optimum performance from manufacturing hardware, getting the most from personnel, and so on, yielding the lowest-possible cost-per-unit on product. However, this kind of dedication to efficiency can cause scheduling of manufacturing to synchronize with supplier schedules, rather than consumer demand.

Decoupling from consumer demand, he said, can cause manufacturing to respond poorly to periodic fluctuations in consumer needs; in effect, the goals of manufacturing operations can come into direct conflict with the goals of the sales organization. Commitment to high-volume production can cause availability of some products to slip, due to inventory shortages tied to the production schedule.

Bjorklund proposed that compromise is the key to reconciliation in this scenario, and that the benefits to customers outweigh the cost of supporting some manufacturing inefficiency.

“Going forward, manufacturing would not be making unilateral decisions about batch sizes and production schedules, circumventing their natural tendency to focus on manufacturing efficiency,” he said. “Instead, they would now be obliged to produce only enough to cover a certain period of time based on the sales projection. That means that every product will now be produced more frequently and in smaller batches.

“To encourage this behavior, other metrics and KPI’s can be introduced that are more holistic and based on customer service levels and inventory turns, rather than just production output. The higher the speed through the supply chain, the higher the inventory turns and the less capital tied up in inventory at any given time. At the same time, the faster the raw materials move through the supply chain, the less obsolescence you have and less expired materials you have.”

“Technology can play a vital role in eliminating this constraint,” he said, citing a useful example of supplier-manufacturer scheduling conflict. Packaging of manufactured products, if outsourced, can be problematic if the supplier of the packaging doesn’t have advance knowledge of how much product will be produced, when the creation of the packaging takes longer to produce than the product itself.

How can technology eliminate the constraint? In Bjorklund’s example, the manufacturer set up a portal for suppliers and published its production plan and schedule, so that the packaging supplier (and other vendors) could set their own schedules accordingly.

Such measures have an obvious positive effect on supply chain efficiency, and the increased efficiency alone would justify the manufacturer’s investment in designing and deploying the portal. But Bjorklund pointed out additional, less obvious benefits, including greatly reduced administrative effort and real-time communication between manufacturer and supplier, both in coordinating activity and resolving disruptions.

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The Internet of Things, increasingly ubiquitous in business, manufacturing, and consumer activity, can empower the supply chain in a number of significant ways, according to Tony Kontzer, manufacturing technology analysis for TechTarget.

IoT’s impact on some of the more prominent features of supply chain operation, such as awareness and visibility, are increasingly apparent. But Kontzer argues that this is just the tip of the iceberg.

Sensors that monitor manufacturing equipment are not new, but adding their input to physical plant management can increase efficiency, fault tolerance, and analytics, he argues.

Kontzer quotes George Favalaro of PricewaterhouseCooper, who made the case for real-time communication between machines in production environments, for the purpose of identifying inefficiencies and equipment wear/failure when they happen: “If your equipment is starting to wear and is drawing more energy, you want to know that, and you don’t want to know it in three or four months, you want to know it right away.” This real-time sensory communication can be leveraged for climate adjustment, identifying leaks and other useful savings.

Detection and prediction of malfunctions increases the value of IoT in manufacturing, enabling machines to be shut down when failure is imminent, making the environment safer and minimizing the impact of a shutdown. Moreover, IoT can increase the accuracy and improve the logistics in equipment repair by providing additional information on an equipment failure up front.

Finally, adding this data to the overall flow of information between supply chain partners can be invaluable in disruption management, minimizing the impact of manufacturing downtime and production shortfalls.

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Seeing Walmart on the Gartner Supply Chain Top 25 list is certainly not unusual (they are #14 on the 2014 list), nor is it surprising to learn the retail giant grossed $476 billion in sales during the fiscal year. But few are aware that Walmart achieves that tally against distribution costs of just 1.7% of those sales.

Walmart’s success in supply chain management is the result of many years of industry-leading innovations in both data management and strategic distribution methodology. While these innovations are numerous, a recent study by the University of San Francisco highlighted several:

Vendor-Managed Inventory. Since the 1980s, inventory in Walmart warehouses has been managed by the suppliers themselves, motivating partners to operate more efficiently on their side and to share their logistics and analytical data.

Centralization of performance data. In 1989, Walmart pioneered data centralization, consolidating at the national level its point-of-sale data, nation-wide warehouse inventories, and distribution center activity. Since then, much of that data has been integrated into the logistics and planning of its partners.

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http://feeds.feedblitz.com/~/90035729/0/b2b~Supply-chain-management-innovation-keeps-Walmart-on-Gartner%e2%80%99s-Top-list/feed/0http://www.b2b.com/2015/04/20/as4-is-succeeding-as-core-protocol-of-european-gas-distribution-cooperative/AS4 is succeeding as core protocol of European gas distribution cooperativehttp://feeds.feedblitz.com/~/89632343/0/b2b~AS-is-succeeding-as-core-protocol-of-European-gas-distribution-cooperative/
http://feeds.feedblitz.com/~/89632343/0/b2b~AS-is-succeeding-as-core-protocol-of-European-gas-distribution-cooperative/#commentsMon, 20 Apr 2015 20:06:37 +0000http://www.b2b.com/?p=2611AS4 is being implemented as the B2B communication standard for the European Network of Transmission System Operators for Gas (ENTSOG), an initiative years in the making that recently passed the proof-of-concept stage and is now being shared out to implementation teams in the member nations. ENTSOG’s mission, to create a unified market for gas on […]

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AS4 is being implemented as the B2B communication standard for the European Network of Transmission System Operators for Gas (ENTSOG), an initiative years in the making that recently passed the proof-of-concept stage and is now being shared out to implementation teams in the member nations.

ENTSOG’s mission, to create a unified market for gas on the European continent with a safe, robust and reliable transmission system that will be scalable in future years, is an ideal proving ground for new and innovative B2B communications methodologies. ENTSOG’s effort encompasses every feature of integrated B2B partnership, including supply chain dynamics, payments, analytics and capacity planning, customer interaction and disruption.

Educating its technical membership this past fall in Brussels, ENTSOG System Operation shared out the results of its AS4 proof-of-concept phase, the goal of which was to validate AS4 as the communications standard between its Transmission System Operators (TSOs).

AS4 is an ideal standard for such a purpose, encapsulating the versatility, robustness and enhanced security features of ebXML, in a simplified and easy-to-implement version. Use of this common protocol among TSOs and their partners is expected to yield considerable savings, reduced error in messaging and significant process improvement, according to ENTSOG.

An advantage of AS4 is the ease with which it can also integrate with existing government systems in each member nation, facilitating regulatory compliance without the need to modify back-end systems. In addition, the standard permits easy TSO integration with a wide range of third-party products.

ENTSOG’s 12-month implementation phase is expected to be completed in April 2016.